Dubai-based company, Beehive, launched the first peer-to-peer lending platform in the area on November 2, 2014. Beehive aims to offer a new transparent option for businesses and investors while helping to reduce the funding gap that exists between larger companies and small to medium enterprises (SMEs).
The company will help businesses raise funds between AED 100,000 and AED 500,000 ($27,000 to $136,000). The funding period is roughly a week and monthly repayments to investors are estimated at 8% to 12%. Beehive charges an initial fee of AED 750 as well as a fee of 2% for one year loans, 3% for two year loans, or 4% for three year loans (if the loan is successful).
It was noted in a Gulf News article that “SMEs in need of funding will have to be in business for at least two years before they can access funding using Beehive, meaning the website will not provide financing to start-ups.” This, along with a thorough application process is meant to help reduce the amount of risk involved for investors.
Beehive was founded by CEO Craig Moore, “an experienced technology entrepreneur, having previously founded a software company that was sold to IBM in 2012.” Another company leader is Chairman Rick Pudner, former Group CEO of Emirates NBD (one of the largest banking franchises in the Middle East).
The team is eager to facilitate change in the area by offering SMEs easier access to financing. Pudner has said:
“I’m very excited to be part of Beehive and as an alternative finance platform I think it will bring significant benefits to SMEs, investors and the region itself. Presently, a major stumbling block for businesses with growth aspirations is gaining access to credit, as banks generally reject between 50-70% of SME loan applications. SMEs represent 90% of total businesses in the UAE but account for just 4% of bank loans. Through Beehive, we have created an innovative online platform that directly connects investors and creditworthy businesses creating mutually beneficial partnerships for growth.”
When it comes to peer-to-peer lending one of the big benefits, according to an Investopedia post is that:
“Many individuals like knowing who they’re lending money to and why they need the money. Not only does it give them a sense of personal satisfaction, but they can also choose borrowers who they believe will repay the loan in full and on time.”
While they make sure to remind investors on their website that “even creditworthy businesses can default, so your capital is at risk,” this is what Beehive is hoping to enable with their new platform. Moore has said:
“Transparency is key to our offering. At Beehive, we are giving individual investors the opportunity to directly support regional SMEs, driving economic growth and employment. We are confident we have created a platform that offers a real alternative to the traditional debt markets and better value to both sides of the lending transaction.”
The company has stated that it does not intend to compete with big banks, but instead offer an alternative option for SMEs. With a very low loan acceptance rate from banks, the company has already seen interest from several local businesses.
